Sick Money: How Mitt Romney's Bain Investments Are Exploding the Deficit and Harming Our Health
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Few individuals or organizations have been as influential as Mitt Romney and Bain Capital in worsening our runaway healthcare costs, causing unnecessary suffering, or accelerating our government's long-term deficit problem. Their highly leveraged investment strategy puts healthcare companies under enormous pressure to increase revenue. They often respond by overbilling -- or worse, by encouraging unnecessary medical treatments that can include anything from non-invasive tests to heart surgery.
I spent many years working in healthcare economics: running health service companies, projecting health plan costs for governments and employers, and analyzing healthcare investments. I've reviewed hospital bills in detail and seen shocking things: Thousands of dollars for bandages and gauze during a surgery; a 12,000-percent markup on ointments; a $250 charge for the lightbulb in a projector the hospital claimed was used during surgery.
I've seen hucksters put red filters over an ordinary flashlight, call it an "infrared" healing device, and charge insurance companies or hapless patients for their use. And I've seen hundreds of cases of human tragedy brought on by unnecessary surgeries performed solely for money. I can't say I was always on the side of the angels, but I can say this: Before Bain, I had never seen behavior that was as consistently bad as we're seeing today.
Mitt Romney and Bain Capital paved the way for other investors in healthcare. Their greed has caused explosive growth in a cost and overtreatment spiral that's threatening Medicare, our healthcare system, and arguably -- us.
The Important Part
Consider the story of Bain Capital and Duane Reade. Bain purchased the drugstore chain and hired a CEO who was later convicted of investor fraud, while the chain itself was selling out-of-date drugs and baby formula to its customers.
Duane Reade's story is not unlike that of Damon International, whose Bain-anointed CEO was convicted for tricking doctors into ordering unnecessary procedures and billing them (ironically enough) to Medicare. Apparently Romney and Bain had an eye for healthcare talent: an evil eye.
But even that isn't the biggest part of the story. This is: Mitt Romney and Bain Capital were among the first to to engage in the kinds of highly leveraged buyouts of private healthcare companies that pressures them to overtreat patients and overbill payers just to satisfy their investors.
Let's add another name to the list of predatory Romney companies: Dade International. No laws were broken in the management of this medical equipment company, although Bain and Romney certainly milked bankruptcy laws for all they were worth.
Most of the publicity around the Dade acquisition centers around Romney and Bain's management: the loss of 1,700 jobs, the cuts to 401(k) and other benefit plans, the ruthless bilking of the company for massive fees to Bain -- which was essentially Romney & Co. --overpaying for work they assigned to themselves, and using investors' money to do it.
Here's the other side of the Dade International deal: Romney and Bain borrowed massively to acquire Dade with other people's money. In order to show returns for their investors, Dade had to grow quickly and aggressively. So Romney & Co. directed Dade to borrow even more so it could acquire some of its competitors.
Eventually Romney and Bain pressured Dade to borrow even more so that it could buy them out. It eventually did, a few months after the February 1999 date that Romney told ABC News marked his retirement as Bain CEO. But papers filed with the SEC continued to list him as both CEO and sole shareholder for nearly three years. If those statements are false it could be grounds for fraud charges, since it is illegal to knowingly file false information with the SEC. If they're true, Romney remained closely involved with the Dade deal.